Retailers welcome European court ruling that could pave way to ending high card payments fees to banks

UK retailers have welcomed a court ruling that could pave the way to end the high fees that stores have to pay banks to process card payments.

The British Retail Consortium said that a judgment this month by the European Court of Justice ‘comprehensively and decisively supports retailers’ decade-long campaign for a more competitive payments system and a reduction in unjustifiably high card fees, which cost UK businesses £1 billion a year’.

Its comments come after the court ruled that ‘interchange’ fees charged by MasterCard to cover processing of card payments had, in the past, had ‘restrictive effects on competition’. It has since reduced its fees.

But while the BRC said it was ‘delighted’ with the ruling, it warned that the UK is already falling behind other European countries that have introduced more immediate domestic caps and provided ‘much-needed redress’ for their retail businesses.

‘France, Spain, the Netherlands, Poland, Romania and Hungary have started or have already taken action – as have the USA, Australia and Canada outside Europe,’ it said.

Helen Dickinson, director general of the BRC, which has been calling for a cap on interchange fees, said: ‘While this is great news, the UK risks falling behind other countries who have already chosen to act to reduce the anti-competitive costs of interchange fees at a domestic level. There is a real opportunity for the Government and Payment Systems Regulator to go further and faster by taking more immediate action in the UK.’

The European Parliament voted in April in favour of plans to cap interchange fees at 0.3 per cent of credit card transactions and 0.2 per cent for debit card transactions, while online third-party payment providers would be forced to disclose the cost of processing payments. The proposals are being considered by the EU Council of Ministers.

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In an interview with The Mail on Sunday last year, Marion King, MasterCard’s UK president, argued that her business has been misunderstood and that the real victims of any clampdown will be shoppers.

‘The reason regulators are involved is that many merchants believe that balance isn’t right. They clearly want to pay less, and that’s understandable,’ she said.

Javier Perez, president of MasterCard Europe, described the ruling as ‘disappointing’, adding: ‘Market-based solutions are the best way to ensure a fair and competitive payments landscape in Europe – one that makes consumers’ lives easier, and brings increased business for merchants. The judgment will have little or no impact on how MasterCard operates.’

Meanwhile, Apple this month announced that it is to launch Apple Pay, a mobile payments system, and it has reportedly negotiated lower-than-normal interchange fees.

Visa executive Jim McCarthy said: ‘Having a partner like Apple really was like catching lightning in a bottle.’